The Kelda Group has submitted its response to Ofwat on the proposed restructuring of the company. The board of Kelda views its proposal as a balanced approach with benefits to all parties concerned - customers, shareholders, employees and the community. All arrangements are to be subject to regulatory approval and are fully compliant with the existing price determination.
The main elements of the proposal are based on:
The creation of a mutually based organisation to own Yorkshire Water Services and its assets and to undertake all licence responsibilities.
Absolute continuity of service for essential day to day operations ensured. The existing operator Kelda to be retained (subject to phased competitive tendering).
An agreed refinancing to achieve lower costs making use of long term bonds with lower interest rates.
Transfer of operational risks from customers and reduced interest cost uncertainty.
Improved protection of existing price benefits within the current price determination period.
Introduction of further customer gains from lower costs of capital and shared benefits of operational out-performance.
Longer term customer gains from efficiencies generated by competitive outsourcing.
The replacement of shareholder ownership of essential water assets by a form of community ownership.
In addition to regulatory and shareholder approval, the board of Kelda recognises that as the proposal involves the creation of a mutual, there should be a clear community endorsement. The form of this endorsement is currently being discussed with the regulator, Ofwat, the Ofwat CSC and the proposed Yorkshire Water mutual.
